Law:

Section:

Section 271(1)(a) of the Income-tax Act, 1961 - Penalty - For late filing of return - For assessment year 1963-64, assessee-company filed return belatedly on 2-1-1965 whereas it was due on 8-6-1963 - Assessee explained that delay was due to fact that audit was completed on 10-9-1964 and same was placed before annual general meeting on 23-10-1964 - Whether delay in filing return up to 10-9-1964 was due to reasonable cause - Held, on facts, yes FACTS For the assessment year 1963-64, the assessee-company filed the return belatedly on 2-1-1965 whereas it was due on 30-6-1963. In penalty proceedings initiated under section 271(1)(a) the assessee stated that the delay in filing the return was for the reason that its books of account for the immediately preceding assessment year 1962-63 were taken into custody by the official receiver appointed by the High Court in connection with a suit for winding up of the company and the same were released on 15-9-1963, when the audit for the said year was taken up, which was completed some time in February 1964 and that only thereafter the audit of the accounts for the relevant assessment year was completed on 10-9-1964 and the same was placed before the general body meeting on 23-10-1964. The ITO observed that the books of account were returned on 19-9-1963 to the assessee while the return was filed on 2-1-1965. The ITO, therefore, imposed penalty under section 271(1)(a). The AAC as well as the Tribunal held that since the audit report was received on 10-9-1964, the delay in filing the return up to that date was explained and such delay was not without reasonable cause. On reference : HELD Unless the audit is completed and the auditor's report and balance sheet are made available, a company cannot furnish the return of income. In the instant case, both the appellate authorities held that since the audit report was received on 10-9-1964, the delay in filing the return up to September 1964 was explained and such delay was not without reasonable cause. Accordingly, delay in filing the return up to 10-9-1964 was not without reasonable cause. CASE REVIEW CIT v. U. Chhoruky [1976] 2 CLJ 152 followed and relied upon. CASES REFERRED TO…

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